USD/JPY: bleeding pauses, but risk remains toward the downside

The USD/JPY pair resumed its decline early Asia after reaching 112.78, accelerating its decline mid-European morning, following headlines stating that Chinese officers have recommended to halt or reduce buying of US Treasuries. The pair broke the 112.00 level, which contained slides since early December, accelerating south afterward, now trading near its daily low of 111.26. Dollar's slide is on pause ahead of the US opening, but in the meantime, stocks are sharply lower in pre-opening trading, bonds are down and yields advancing. Higher yields usually back the case for a USD/JPY rally, but today's not the case.

The US will release some minor economic figures that can hardly change the ongoing negative sentiment toward the American currency, while later in the day, a couple of Fed's speakers will hit the wires. These last can have a limited influence on the USD trend short-term.

In the meantime, the pair maintains its strong bearish momentum according to technical readings in the 4 hours chart, with the price far below its moving averages that anyway continue lacking directional strength, while technical indicators continue heading lower, despite being in oversold territory. A modest bounce from here is possible, with resistances at 111.60 and 112.00 and selling interest probably resurging around this last. Below 111.20, the immediate support, the downward potential increases, with 110.87, November low, as the next bearish target.